How Renewable Energy Will Dethrone the Powers That Be

What will America’s post-petroleum future look like? T. Boone Pickens, oil titan turned clean energy advocate, gives his take on the energy industry and where it’s headed in this excerpt from the new book “Power Trip.”

Putting up a big cone made of sticks and canvas isn't really all that challenging. Just maybe start ...

The following is an excerpt fromPower Trip by award-winning environmental authorAmanda Little (HarperCollins Publishers, 2009). As America struggles with full-blown oil addiction, Power Trip takes a look at how we got to this point, and focuses on the exciting solutions that are reshaping America’s economy, politics and cultural identity. Listen to Amanda discuss the book onMOTHER EARTH NEWS Radio. This excerpt is from Chapter 8, “Earth, Wind, and Fire: How Renewable Energy Will Dethrone the Powers That Be.”

After months of exploring the great successes and sobering realities of our energy past and present, I was ready — desperate even — to map what lies ahead. In his book The Beer Can by the Highway, John Kouwenhoven contemplates “what’s American about America,” and concludes that a “distinctive blend of technology and … democracy” is what makes this country unique. He writes that our “inventiveness, adaptability, and other qualities which tend to foster industrial productivity (and hence abundance) are directly traceable to drives inherent in the democratic ideal.”

In my journey through America’s highways, farmlands, military frontiers and drilling territories, I had witnessed this phenomenon again and again. I had seen how a combination of technological ingenuity and the American dream in people ranging from Croatian salt miners to Norwegian American farmers propelled our culture forward into the modern age, from Anthony Lucas’s Spindletop gusher to the breakthrough inventions of John Rockefeller, Thomas Edison, Henry Ford, William Levitt, Earl Tupper, Malcolm McLean and Norman Borlaug.

I’d come to realize, moreover, that this was not solely a good thing. American ingenuity had consequences both greatly beneficial and perilous in the 20th century. It built our mechanized military, engineered our oversized cars, sprawled out our cities, invented our plastics, nourished our bumper crops, extended our supply chains across the globe, and connected the millions of miles of our electric grid. And along the way, it got us roundly hooked on fossil fuels. Just the same, American ingenuity may still have the power to reverse the negative consequences of our fossil fuel past and kick our costly habit.

I had a bullish sense of hope on this last point, and set out to explore the conviction more deeply. I wanted a firsthand glimpse of our emerging clean-energy landscape, where every kind of natural element — wind, sun, ocean tides, the warmth of the earth, even human exercise and sewage — can be transformed into electricity. No area of our economy more vibrantly reflects American ingenuity today than the development of “clean technologies,” a catchall phrase that refers to nonpolluting energy sources and the new generation of buildings, transportation systems and factories that will use them. (A portion of these energy sources is also commonly called “renewable” — those that are cyclically replenished by nature, not permanently lost when used as are fossil fuels.) It’s also true that a daunting range of obstacles could stall the development of these innovations and threaten their success — barriers I wanted to examine as well.

War Without Guns

My venture into America’s energy future began with a trip to a flat, dry and mostly barren town in the gusty prairies of west Texas that had become one of the leading frontiers of America’s clean energy development. The very same region of the country that offered up a seemingly limitless supply of oil in the days of Spindletop had been selected as the site for the world’s largest wind farm. In June 2007, billionaire investor T. Boone Pickens announced a $10 billion bet to build a 4,000-megawatt wind facility centered in the town of Pampa, Texas. I made arrangements in the summer of 2008 to travel west with Pickens from his Dallas office to Pampa, a few hundred miles away, where 200,000 acres of this massive wind experiment had been marked for construction.

I was, if anything, more curious about Pickens himself than about the project he was planning. Pickens’s recent decision to advocate renewable energy struck me as a promising development for our energy future. As Pickens goes, I thought, so goes America: He is the oil titan who comes the closest (in both his achievements and his inherent contradictions) to being a modern-day John D. Rockefeller, and his choice represented a 180-degree shift in energy policy.

Pickens made his billions as an oil entrepreneur overseeing the production of more than 200 million barrels of petroleum from wells throughout the world. As a corporate profiteer, he famously tried to snatch Gulf Oil from the grip of Chevron. As a political booster, he has spent 50 years prodigiously supporting Republican campaigns. He spent millions to fund the Swift-boat ad campaign that damaged John Kerry’s bid for the presidency in 2004 — a stance for which he voices no regret to this day. Pickens is, in short, an unlikely hero for the modern-day environmental movement.

But in the summer of 2008, Pickens announced what he called the “Pickens Plan,” a massive push to free America from its dependence on foreign oil and to develop clean alternative sources of energy, including natural gas, wind and solar power. “I’ve been an oilman my entire life,” he said, “but this is one emergency we can’t drill our way out of.” To some traditionalists in the oil industry, Pickens is a defector, a turncoat of sorts. Others — environmentalists and progressives included — consider him an enlightened soul, a converted sinner, a man in his twilight years (Pickens is in his 80s) who saw his industry hurtling toward doom and sought salvation in the clean energy gospel.

Along with the Pickens Plan came a massive PR blitz to promote it, a $58 million media campaign including print ads and TV and radio commercials as well as appearances on every program from Charlie Rose to ABC’s The View. In this, Pickens has aimed to create an unusual new embodiment of the 1970s grassroots environmental campaign, calling his crusade “a war without guns” and recruiting citizen-soldiers in a video posted on his website: “We have to have an army and you’re part of the army. Bring your friends, family, your church group, everybody together that you can think of.” More than a million and a half Americans have signed on to fight for his agenda.

I met Pickens on what turned out to be a fitting day for a discussion of wind energy — a blustery morning that, by the time I arrived at his office in downtown Dallas, was quickly evolving into a violent electrical storm. Wind, Pickens assured me, is a long-term investment that promises huge financial rewards: “I’m out to hunt elephants — I don’t get off the trail for rabbits.” His office attests to a man who hunts big game: It’s filled with luxurious leather couches and mahogany desks; cast-iron sculptures of bison; giant gilt-framed oil paintings of sunsets, running horses, and the Wild West; and photos of Pickens smiling alongside Republican presidents from Richard M. Nixon to George W. Bush, with jaunty personal notes from each commander in chief displayed.

I was surprised by Pickens’s appearance and manner. He wasn’t the ruthless, swashbuckling figure of legend who’d inscrutably stared from the cover of Time in 1985 above the headline “The Takeover Game — Corporate Raider T. Boone Pickens.” Instead, he was approachable and good-natured, even paternal in his manner. A fit, sturdy man with a tidy crop of silver hair, Pickens works out daily with a team of personal trainers and appears younger than his years, his age belied only up close by a discreet hearing aid, a slight hesitation in his walk, and an occasional tired droop to his steel blue eyes.

Pickens has brought an unexpected cowboy swagger to the clean energy agenda, describing the renewable industries, for instance, as “hotter’n a three-nutted tomcat.” He took polite but firm exception to my mention of Al Gore’s climate change initiatives. Though Pickens does see global warming as “a serious concern,” he makes no pretense to being an environmental do-gooder: “Don’t think I’m Al Gore. I’m not going to do a major investment in wind farms for the environment first and money second. I’m a fella who thinks with my wallet.”

Pickens believes that the world has already reached peak oil. “The industry can at a maximum produce 85 billion barrels a day, while the global demand is 86.4 billion barrels,” he told me. “You bet your ass that demand is gonna keep rising, along with the price.” While he has cheered proposals to open protected lands and offshore areas to drilling, he said that’s only one small element of a sound, long-term national energy strategy.

Pickens believes that America can cut its oil dependence in half by shifting our transportation sector to natural gas (for heavy vehicles) and electricity (for passenger cars) while substantially increasing wind development to supply 20 percent of our electricity demands in under a decade — up from roughly 1 percent today. “We also need efficiency, solar, nukes, any alternatives we can get,” he said, but stressed his belief that wind has the biggest growth potential.

For all his emphasis on financial pragmatism, Pickens confessed to having a sense of “mission” in his current work. “I think I was put here for two reasons,” he told me, “to make money and be generous with it, and to find good ideas and get them into play. I think I’ve got a solution to peak oil. The only other plans I’ve seen are to roll over and die.”

Blowin’ in the Wind

As we boarded Pickens’s Gulfstream jet to Pampa, the storm had improved only slightly. Dallas’s Love Field airport had grounded many flights to wait it out. But Pickens, a man who makes his own rules, instructed his pilot to take off as scheduled. Married four times, Pickens craves change and seems to like controversy even more, readily embracing a paradigm shift in his industry while other tycoons resist it. He welcomes rather than avoids risk.

He credits his father, Tom, for this life lesson, dating it back to the night of his birth in Holdenville, Okla. It was a difficult delivery, and at one point the doctor informed Tom, “You can save your wife or your baby, but not both.” Pickens’s father refused to choose, instead urging the doctor to attempt — successfully, as it turned out — the hospital’s first-ever Cesarean section. “I’ve always said I’m the luckiest guy in the world,” Pickens often muses. “I certainly think I was on that particular night.”

Tom Pickens leased mineral rights for oil companies, earning a comfortable but modest living through the Great Depression. Pickens loves to recount stories of his own early days as a newspaper boy in Holdenville, when he grew his clientele from 28 customers to 156 by muscling his way into the paper routes of other local boys — testing a strategy of “rapid expansion by acquisition” that he later mastered as an entrepreneur. After graduating from Oklahoma A&M (now Oklahoma State University), Pickens accepted a job as a geologist at Phillips Petroleum, but he eventually grew impatient with the company’s bureaucracy. At 26, he was married with two children and a third on the way, and if he left Phillips, he’d be turning his back on a guaranteed $500 a month. “No one gave me a prayer of succeeding, except my parents,” he recalled.

But he decided to set to work as an independent geologist, applying $1,300 from his Phillips retirement account toward a Ford station wagon in which he traveled the Texas Panhandle, consulting and arranging oil drilling deals. His early successes led him to the founding of Petroleum Exploration Inc., later Mesa Petroleum. As he continued his bootstrap “expansion by acquisition,” he gradually amassed a vast independent oil empire and later founded BP Capital Management, a private equity firm that invests mainly in energy ventures.

Now, even as he is betting huge on wind and promoting solar and biofuels, Pickens says he’ll continue to make money off the energy past that generated his fortune for as long as he can — after all, the rising demand for oil is a good formula for near-term profit.

Unlike Chevron’s Paul Siegele, Pickens doesn’t believe that technology breakthroughs will open up new frontiers for oil. “The oil just isn’t there — no technology can change that,” he says. “And with China and India pushing up the global demand, new discoveries just can’t keep up with it.” Pickens is personally offended by the fact that his native country has become so thoroughly dependent on Middle Eastern oil. “It’s sheer lunacy that we’re sending our money to the Arabs,” he told me, adding that, “In the era of peak oil, the U.S.A. is sucking hind tit.” Translation: We’re the runt that will suffer most when the oil runs low. “The U.S. spends $700 billion annually on foreign oil — money that’s going largely to our enemies. Our attitude has been ‘Send us oil, never mind the price or the conflict.’ That’s gonna cripple the hell out of this country. I can’t stand around and watch that happen.”

As the storm cleared and the turbulence died down, Pickens settled comfortably into his monogrammed leather seat, satisfied that the skies had finally cooperated with his plan. He looked out the plane’s window at the vast ranchlands of western Texas where he envisioned building his fleet of 2,700 wind turbines, each standing 300 feet tall with blades half the length of football fields. I followed his gaze out to the flat, distant prairie only occasionally punctuated by farms the size of postage stamps, with two-lane highways strewn like loose threads across the landscape.

The economics of energy is radically changing, Pickens told me, moving his bony hand through the air like a wizard waving a wand. His formula for the long-term shift to renewables is simple: The more global oil demands increase, the more oil prices are bound to increase over time, the more pollution will increase, and the more money we’ll send to our enemies overseas. Conversely, the more the demand for renewables increases, the more their costs will decline, the more pollution will decline, and the more jobs we will create at home. “The shift to homegrown energy sources is patriotic, it’s economic, it’s diplomatic, it’s environmental — it’s win-win-win-win.”

That’s the argument Pickens presented to a room full of hundreds of ranchers and farmers in the Pampa Civic Center — our destination once we landed. He had come to host a town hall meeting to pitch his plan to make this rural community in the Texas Panhandle — population 17,800 — the “wind capital of the world.” And he had come to answer questions about how such a fate would change the lives of the individuals whose land would be underneath his turbines. Even though Pickens had already assembled leases for 200,000 acres of turbines — enough to start construction on his project — he wanted to double that area and still had some local politicking to do.

The Pampa Civic Center is a spare, one-room building surrounded by strip malls, a narrow highway and flat prairie as far as the eye can see. Inside I found cinder-block walls, concrete floors and metal fold-out chairs with seats bowed from years of use. Dressed in khakis, tasseled loafers and a hunting vest, Pickens stood out against the sea of overalls and cowboy hats. He stepped onto the plywood stage to a hesitant smattering of applause. Pickens is a controversial figure in these parts — while some see him as a folk hero, many resent him for buying up water rights in western Texas and controlling precious public resources through his Mesa Water Inc. But the room quickly warmed to him as he outlined the financial incentives of his wind farm. “Wind will revitalize rural America, starting with Pampa,” Pickens vowed.

His turbines would create 1,500 new jobs, and landowners could continue farming and running cattle with an added revenue boost from harvesting wind. Five turbines would be located per square mile, and those who housed them on their property would get royalties of up to 7 percent on the energy produced, said Pickens. That works out to an average per turbine of $10,000 to $20,000 per year — in an area where the average per-capita income is below $18,000.

“Why aren’t you putting them on your land?” one audience member asked Pickens as he milled among the crowd after the event, referring to Pickens’s nearby 68,000-acre private ranch. The magnate answered directly and honestly that he’d rather not look at them. Another audience member commented that this shouldn’t be a concern — most Texans have spent their lives looking at vistas of oil derricks, “which aren’t any prettier’n windmills.”

Would the turbines make noise? Yes, answered Pickens, but “it’s the sound of money in your pocket.” The best part, he noted, is that wind is a perpetually renewed resource with no declining production curve, meaning it doesn’t have the price volatility of oil. “Say you have a wind turbine on your land that does $20,000 per year. It’s just blades on a post — simple machinery, easy maintenance — but it’ll be blowing out there for, oh, a century, maybe more. Over time it generates $2 million for your family, that single machine. It’s a whole different scenario than an oil well that produces for a few years, and then it’s done for.”

To Pickens, who spent his career weathering the cyclical booms and busts of the oil markets — that problem dating back to Spindletop of instability caused by supply gluts and deficits — the promise of an energy industry fueled by sources that can be infinitely replenished is a dazzling novelty.

Pickens’s grand vision has since hit some sizable roadblocks. Amid the credit crisis and the sharp decline in oil and natural gas prices at the end of 2008, the tycoon’s $1.3 billion private equity fund reportedly plunged in value by a staggering 97 percent. In the economic downturn, Pickens also lost the backing on his $10 billion wind project, preventing him from building the high-voltage transmission line that would have delivered his rurally produced power to faraway population centers. Pickens set about modifying his proposal, putting the Pampa project on hold and exploring the possibility of dividing it into several smaller wind farms in states including Oklahoma, Kansas, Wisconsin and Texas. But he maintains his strong support for renewables, noting that the 2008 plunge in energy prices was only temporary — “ the price is going back up” — and that the fundamentals of the Pickens Plan are still sound: “I haven’t changed anything; you don’t shoot for the moon from the start.”

Ms Bennett is right.
He has been trying to renew interest in his project.
He was going to do "emminent domain" on several land owners, trying also to get DFW to buy water from the panhandle. They said "NO". I'm glad he was shot down
in this endeavor. He is an evil robber baron.

Kathleen Appelbaum

1/24/2010 9:37:20 AM

Believe it or not even a Republican can have a good idea.
I think this is an idea whose time will come and soon.
Whose pockets would you rather line Arabs or American 'robber barons'?
How do you prefer to break our 'addiction to energy'?
Give us your ideas.

Wilma Howe-Bennett_6

1/22/2010 3:16:38 PM

T. Boone Pickens, when told that A) He wasn't going to be allowed to imminent domain land corridors for his WATER COMPANY and B) Ditto on the wind power project, cancelled everything and went back to Oklahoma to pout. He also got his nose put out of joint when the power companies insisted that he pay for at least 1/2 the maintenance costs of the transmission lines after which the power companies would CONSIDER using his wind-generated power. He's a robber baron, never think that he isn't.

alberto

1/22/2010 2:31:59 PM

Pickens has cancelled his plan for the West Texas wind farm.
New supplies of natural gas have lowered the price to a point where alternative electrical sources cannot compete without government mandates and/or subsidies.

Thomas Schildman_1

1/22/2010 11:55:27 AM

Post Petroleum Amerika will look like any other third world country. Unless we monopolize on the production of the renewable energy hardware needed by everyone else.
Until this country gets back to producing, instead of consuming, we are headed down hill.
TCS

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